Ad-Hoc Income Tax Addition on Guess Work: ITAT Remands Matter Despite Assessee’s Failure to Furnish Evidence

Ad-Hoc Income Tax Addition - ITAT Remands Matter The ITAT recently remanded a case involving an ad-hoc addition under Section 68 of the Income Tax Act. The addition was based on guesswork by the Assessing Officer (AO), who made a presumption due to the taxpayer's failure to provide evidence for certain income entries. Despite the taxpayer’s failure, the ITAT concluded that income cannot be added based purely on assumption and guesswork. The tribunal highlighted the need for proper assessment and evidence rather than arbitrary judgments. As a result, the case was remanded to the AO for further review, offering the taxpayer another chance to furnish proper evidence to substantiate their claims. This ruling underscores the ITAT's view that even in cases where taxpayers fail to provide evidence, authorities must refrain from arbitrary income additions.